A seller wants to sell one-time-use, USDA-approved polyester straps to meat packers, replacing the reusable stainless steel hooks currently used to suspend carcass beef in refrigerated rail trailers for shipping (the straps are also lighter and skip the hook-sanitizing requirement). Do these straps qualify for a sales tax exemption as packaging supplies?

Plain-English summary

A seller planned to sell USDA-approved, one-time-use polyester straps to meat packers, to replace the reusable stainless steel hooks currently used to suspend carcass beef quarters (front and hind) in refrigerated rail trailers for shipping. The straps offered real operational advantages — a load using steel hooks weighed about 1,000 pounds more than the same load using straps, and the reusable hooks required sanitizing between uses, which the one-time-use straps eliminated. The seller, citing Rule 3.314 (on wrapping, packing, packaging supplies, and containers), argued the straps should be exempt as part of the manufacturing process, and had already received informal guidance from a Comptroller staff member pointing to that rule.

The Comptroller confirmed the exemption applies, but on packaging-supply grounds rather than a general manufacturing-process theory: the straps qualify for exemption as PACKAGING when sold to a meat packer that processes the meat for sale, fitting Rule 3.314(a)(1), (4), and (5)'s definitions of containers, packaging supplies, and returnable containers. This holds true even though the seller in this scenario also sold to meat packers whose products it separately transported.

What this means for you

Meat packing and shipping supply sellers

Products used to physically secure, suspend, or transport a packer's processed product for shipment can qualify for exemption as packaging supplies under Rule 3.314, even if they're functionally similar to non-exempt shipping/handling equipment (like the reusable steel hooks here) — the exemption analysis in this letter centered on the packaging-supply characterization rather than a general "used in shipping" argument.

Businesses replacing reusable equipment with one-time-use alternatives

The exemption followed from classifying the straps as packaging supplies sold to a meat packer, not from the one-time-use nature of the product itself — don't assume switching from reusable to disposable automatically changes tax treatment; confirm the specific exemption category that applies to your product.

Accountants and tax professionals

This letter is a useful example of Rule 3.314's container/packaging-supply exemption reaching an item (shipping straps) that might otherwise be analyzed as shipping/handling equipment — the key fact was that the straps were sold TO a meat packer who processes meat for sale, tying the sale to that packer's packaging needs.

Common questions

Q: Are shipping straps sold to a meat packer exempt from Texas sales tax?
A: Yes, when they qualify as packaging supplies under Rule 3.314(a)(1), (4), and (5), sold to a meat packer that processes the meat for sale.

Q: Does it matter that the straps are one-time-use rather than reusable like the steel hooks they replace?
A: The letter doesn't hinge the exemption on that distinction — the exemption follows from the straps' classification as packaging supplies.

Q: Does this exemption cover any strap or shipping material sold to any business?
A: No — this ruling is specific to straps sold to a meat packer processing meat for sale, fitting the Rule 3.314 packaging-supply definitions.

Q: Can I rely on this letter for my own shipping/packaging product?
A: No. It's based on the facts presented, and the letter notes the opinion may change on additional or different facts.

Citations and references

• 34 Tex. Admin. Code Rule 3.314(a)(1), (4), (5) (containers, packaging supplies, and returnable containers definitions)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9803326L

Original ruling text

March 17, 1998

Dear **:

Thank you for your letter of March 4, 1998, concerning the taxability of
polyester straps attached to and used to suspend carcass beef in refrigerated
rail trailers.

The straps are used to replace stainless steel hooks presently being used.
This strap will be used by packers in shipping this commodity to their
customers. The material has U.S.D.A. approval and is a one-time use product.

You received a fax from Mr. Donald Dillard of the Comptroller's office.
According to Section (Rule) 3.314, you feel that the straps should be exempt
because the items would be used as part of the manufacturing process. Mr.
Dillard faxed Rule 3.314 concerning wrapping, packing, packaging supplies and
containers to you.

In our telephone conversations of March 12 and March 16, you explained that
there are two kinds of straps, one for the front quarters and one for the hind
quarters. A load of beef quarters loaded using the steel hooks weigh one
thousand pounds more than a load using the straps. The hooks required
sanitizing before being used again, but the one-time use straps eliminates that
requirement.

You will sell the straps to meat packers, including those meat packers whose
products you transport. The straps qualify for exemption as packaging when
sold to a meat packer that processes the meat for sale. Rule 3.314 defines
containers, packaging supplies and returnable containers [see (a)(1), (4) and
(5)].

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

You may call me toll free 1-800-531-5441, extension 3-4683 if you have any
questions or need more information. The direct line is 512/463-4683. You may
also write to Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Eddie C. Washington
Tax Policy Division

cc: Donald Dillard, Tax Assistance